Lee Chang-yong, Governor of the Bank of Korea, Interview with Bloomberg
“If a situation like the Silicon Valley Bank (SVB) bankruptcy had occurred in Korea, the rate of deposit withdrawal would have been 100 times faster than in the United States.”
In an interview with Bloomberg in Washington, DC on the 13th (local time), Bank of Korea Governor Lee Chang-yong said of the recent global banking crisis, “This situation has given us a lot of homework.” He emphasized, “As digital banking for young people is much more developed in Korea and the speed of deposit withdrawal is faster, we need to prepare for this digital age.” This means that when a banking crisis hits, a digital ‘bank run (mass withdrawal of deposits)’ can come to us at a tremendous speed without needing to use our hands.
Governor Lee said, “In the past, when banks closed, deposits were returned within days, but now we have to return them to customers within hours. The new task is how the Bank of Korea will respond together with the supervisory authorities,” he explained.
Governor Lee, who is visiting the U.S. to attend the G20 Central Bank Governors’ Meeting and the International Monetary Fund (IMF) World Bank Group (WBG) spring meeting, said at a luncheon meeting with accompanying reporters earlier that day, “The recent bank-related crisis has caused many central banks to suffer.” There are many concerns about how to change regulations and deposit protection systems in this digital economy.”
Governor Lee pointed out the need to establish a fake news monitoring system using AI, referring to the recent spread of false information that OK Savings Bank and Welcome Savings Bank incurred a project financing (PF) loss of 1 trillion won. He emphasized, “When fake news spreads through social media, people can withdraw money from their banks at an incredibly fast pace.” In this regard, Financial Services Commission Chairman Kim Joo-hyun also ordered to deal with malicious rumors that could cause confusion in the financial market at a executive meeting on the 14th.
In a recent meeting of heads of economic and financial authorities, Governor Lee directly refuted reports that the Financial Supervisory Service made bitter remarks about the pressure on banks to lower lending rates. “(At the meeting), we talk about the current interest rate situation, but we never said, ‘Don’t intervene microscopically,’” Governor Lee said bluntly. At the same time, he added, “I think it is natural for the government to guide or ask for a reduction in the deposit and loan interest rate margin (difference).”
Regarding the global economy this year, he said, “The US economy will be high and low, but we depend on China and the information technology (IT) economy.” I will go from upper to lower,” he predicted.
Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho, who is visiting the US, also met with reporters in Washington DC on the 13th and said, “Korea will show better economic trends in the second half (July-December).” Regarding the financial situation in Korea, “If you look at the opinions of Wall Street and credit rating agencies in New York, confidence in the soundness of Korea’s financial market and institutions is quite high.” The possibility of coming as a systemic risk that spreads anxiety is extremely limited.”
Meanwhile, Deputy Prime Minister Chu met with US Treasury Secretary Janet Yellen on the same day and continued interest and cooperation regarding the US Semiconductor Assistance Act (CHIPS Act) and the Inflation Reduction Act (IRA), saying, “There are still uncertainties in the related regulations, so concerns in our industry remain.” also requested
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.